Alternative Headline: Virginia faces steep Medicaid cuts
[MM Curator Summary]: Virginia health leaders warn of massive coverage losses and funding cuts from new federal Medicaid reforms, while Gov. Youngkin frames them as necessary changes.
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Dr. Basim Khan has worked at Neighborhood Health, an Alexandria-based federally qualified health center, for 15 years. He got his start in primary care at Neighborhood Health’s Casey Health Center, and he still practices there — in addition to his duties as Neighborhood Health’s CEO, overseeing the organization’s 15 clinics across Northern Virginia.
“I love the communities we serve. I love the patients,” he says.
Khan is proud of Neighborhood Health’s role as a social safety net provider, serving uninsured and insured patients alike. And he’s proud of the organization’s growth, from a small practice in an apartment building serving women and children 25 years ago to what it is now: a network of health centers offering a wide range of medical, dental, and mental health services to more than 40,000 patients.
At Casey, that expansion is on full display. The center, which is right next to the Inova Hospital campus off of Seminary Road, includes an in-house pharmacy and lab, on-site mental health clinicians, and space for staff from the Alexandria Health Department to help people with their benefits. A baby crying in an exam room reminds Khan to talk about the center’s efforts to provide some limited ultrasound services for pregnant patients and their ability to offer joint appointments for mothers and newborns.
“We’re able to have mother-baby visits after delivery where we see both a postpartum visit in addition to a newborn visit,” he says. “Oftentimes those visits are really late, right? But with increasing maternal mortality and morbidity, you want to try to get them in as early as possible.”
The goal of all of it, Khan says, is to make it as easy as possible for patients to get the health services they need. But now he’s worried Neighborhood Health may be forced to pull back on the array of services they offer — and perhaps even close locations. The organization’s largest single source of revenue is payments from Medicaid, the federal program that insures low-income people. The reconciliation bill passed by congressional Republicans in July is set to pull federal funds back from Medicaid and make changes to the Affordable Care Act.
“We’ve been growing the safety net to be able to provide many aspects of health care to our population that really needs it. And we’ve had support at the policy level, because we’ve moved things in the right direction over time,” Khan said. “That’s my fear right now, that for the first time in a substantial way, that support is going to recede.”
What exactly the new law will mean for Virginia is still coming into focus for state lawmakers and healthcare providers like Khan. Some early estimates suggest that hundreds of thousands of Virginians could lose their health insurance as a result.
But Virginia Republicans, including Gov. Glenn Youngkin, foresee a less dire scenario, pointing to the law’s large infusion of cash for rural healthcare as an opportunity for the commonwealth.
Virginia-specific impacts
A key part of Neighborhood Health’s expansion was Virginia’s 2019 decision to expand Medicaid under the Affordable Care Act. For the first time, that made it possible for non-elderly adult patients without children to access Medicaid coverage. Currently, nearly 700,000 Virginians have health insurance as a result of the expansion.
Many of the reconciliation bill’s biggest changes will affect that group of people. The bill institutes work requirements for adults with children over 14, asking them to work, volunteer, or go to school 80 hours per month. They’ll be required to prove they did so to the state in order to access benefits.
The bill cuts back on “provider taxes,” which states levy on hospitals and nursing homes – money which they then use to increase federal matching funds for Medicaid, a tactic that helps reimburse providers. It also limits so-called “state directed payments,” eventually pushing the reimbursement rates of Medicaid patient care down to base Medicare rates instead of matching private insurance levels. That change could result in a $26 billion reduction in funding for health providers in Virginia, according to one estimate.
Those three major changes will land especially hard in Virginia, some experts believe. Modeling from KFF, an independent health research group, suggests that Virginia could lose just over a fifth of the Medicaid funding it currently receives from the federal government over the next ten years — one of the steepest reductions faced by any state in the country.
“In all of the different ways that the bill singles out different types of states — there’s three different big buckets, and Virginia meets all three of those,” said Alice Burns, associate director at KFF’s program for Medicaid and the Uninsured. She added that about half of the bill’s cuts target the expansion population.
Burns KFF model found that changes to Medicaid, the ACA, and expiring ACA tax credits would translate to about 350,000 people in Virginia no longer being insured.
Changes to Medicaid will roll out gradually over the next several years, with work requirements set to take effect in 2027.
But other changes will come more quickly. Congress did not extend the so-called “enhanced premium tax credits,” subsidies passed by the Biden administration to reduce costs for people who pay for health insurance on the Virginia Affordable Care Act marketplace. They will expire at the end of this year. Some state officials say that could lead as many as 100,000 Virginians to drop their health insurance, as costs for premiums rise. (KFF modeling found the change might affect about 40,000 people, Burns said.)
“We are concerned that enrollment decreases will be in line with those increases that we’ve seen in Virginia,” said Kevin Patchett, the director of the Virginia Health Benefits Exchange, at a meeting of the House Emergency committee studying the impact of federal cuts.
Some families could see a doubling of their monthly premiums, depending on their income bracket, Patchett estimated.
If the state were to fund the tax credits itself, that would come with a steep price tag: about $250 million annually, according to committee staff. Lawmakers would have to act in the next month to prevent price hikes for patients starting in January, Patchett said.
Dr. Basim Khan. Tyrone Turner / WAMU
Khan said Neighborhood Health and other social safety net providers in Virginia were already facing a difficult landscape, with the end of COVID-era federal and state support, healthcare staffing shortages, and rising costs. Now, he wonders how they will keep up with a possible influx of uninsured patients, even as the organization loses the Medicaid funding that enabled it to serve uninsured people to begin with.
“It’s something that keeps me up at night, trying to figure out how we as a community here in Northern Virginia are going to take care of all of these patients,” he said.
Debate over work requirements
Youngkin has defended the changes to Medicaid as a necessary right-sizing for the program and a return to its original focus on families with small children, disabled people, and elderly adults in long-term care facilities. He told the General Assembly’s Joint Money Committees, to whom he will submit his final state budget later this year, that he supports the work requirements.
“I believe this is fair. It will ensure we strengthen and protect the program for the people it was designed for, but it also opens up an avenue to dignity, to get a job, to go to school, or to volunteer in our communities,” he said at a meeting in mid-August.
Youngkin took issue with language and estimates suggesting Virginians will lose coverage as a result of the changes to Medicaid.
“I do want to be clear, changes to Medicaid are not taking coverage away from anyone,” he said. “I want to say that again: Not a single Virginian is losing access to Medicaid or getting kicked off the program.”
Research from the Urban Institute suggests that about 70% of Medicaid expansion recipients nationwide are already working or going to school.
Youngkin and other Virginia Republicans have pointed to a 2018 analysis from the Joint Audit and Legislative Review Commission which looked at the possible impact of instituting work requirements in Virginia, as proposed in a bill introduced by then-Del. Jason Miyares, the current Virginia Attorney General. That analysis found that about 7% of Medicaid enrollees would be deterred from signing up or maintaining their Medicaid eligibility as a result, though the study was based on projections for the Medicaid expansion population, since it came before the commonwealth expanded Medicaid. Another analysis of Miyares’ bill differed from that estimate, finding instead that somewhere between 10% and 22% of recipients would drop off of the program, depending on how difficult providing the state with evidence of hours worked would be.
Youngkin has also touted a fund in the reconciliation bill designed to shore up rural health providers, which often serve many patients on Medicaid. That will provide Virginia’s rural hospitals between $500 million and $1 billion dollars in the next five years. Youngkin issued an executive order to direct state agencies to get Virginia ready to compete for federal money for rural health systems in early August, and Roberts said the department will begin having conversations with stakeholders in rural parts of the commonwealth.
Choices for state policymakers ahead
Federal guidance is still forthcoming, but Virginia officials think they will likely have some latitude in how they choose to implement the new federal law. Their choices on things like how to define what qualifies as work for the new work requirements, how to verify applicants’ incomes, and what state and local governments can do in the way of outreach to help people navigate the new system could help ease some of the impact.
There will be “big decisions we’ll have to make on policy decisions, asset verification process, and obviously outreach,” Virginia Department of Medicaid Services director Cheryl Roberts told the House Emergency committee.
Roberts said the state may also be able to make its own decisions about granting short-term exemptions to the work requirements for people who are hospitalized or in crisis.
“Those are things that we would work together on as Virginians,” Roberts said. “We decide on what that list looks like.”
Roberts noted that the new law restricts some of Virginia’s decisions about how to operate Medicaid, too. The state currently reimburses newly-qualified recipients for medical care going back 90 days, but that will soon be limited to one month for the expansion population and two months for everyone else. It will also require state and local governments to perform eligibility checks for recipients twice a year, instead of annually.
Khan called on state leaders to approach implementation with an eye to ensuring ease of access for patients.
“I’ve seen how paperwork and red tape can lead to people not following through, not getting coverage when they desperately need it, and then ultimately lead to poor health outcomes down the road because they weren’t able to see a doctor or get a medicine,” he said. “What I’d urge people at the state level to do is to keep that in mind as you design your work requirements to really ensure that people do not unnecessarily lose coverage.”
This story has been updated with revised analysis from KFF.
https://wamu.org/story/25/08/20/va-medicaid-affordable-care-act-health-care-changes/
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